CBS, Fox Discussing Financing Package for Video Partnership

CBS Inc. and 20th Century Fox Film Corp. are actively negotiating a financing package for their CBS/Fox Video partnership, which could generate as much as $75 million to $100 million for each of the parent companies, The Times has learned.

The proposal under discussion with the investment banking firm of Drexel Burnham Lambert Inc. would include the offering of some bonds, but the exact nature of the securities package could not be learned.

Although a portion of the financing would be retained by the 3-year-old home-video venture, much of the money would go "upstream" to the parent companies, sources said.

A cash infusion would be particularly welcome at Los Angeles-based Fox, which reported a loss of $85 million in its most recent fiscal year and has bank debt of about $360 million.

Fox, which pioneered the motion picture industry's participation in the videocassette business, accepted CBS as a partner in 1982. In exchange, Fox received $45.5 million in interest-free 20-year loans and a 50% interest in CBS' studio complex in Los Angeles, which Fox recently sold to MTM Enterprises Inc. for $30 million.

Industry sources estimate that CBS/Fox Video generates about $35 million to $40 million in pretax income annually.